Stay Nation’s management staff has noticed a noticeable distinction between sports activities followers and music followers in terms of shopping for tickets, and CEO Michael Rapino neatly summed this up on the corporate’s Q3 earnings name.
“We’re all the time a little bit amused that sports activities is form of a badge of honor – how costly these tickets [are] – however music, which is priced a lot decrease than sports activities, appears to get extra of the emotional response,” Rapino informed analysts on Monday (November 11).
That value differential has existed for a while. Courtside tickets for an L.A. Lakers sport run between $200 and $600 every, whereas about three-quarters of the live performance tickets bought by Ticketmaster go for underneath $100, in accordance with a remark Rapino made at a Goldman Sachs convention earlier this 12 months.
But it has typically been music audiences which have complained about costs, with Ticketmaster feeling the blowback, as within the case of high-priced tickets for Bruce Springsteen’s 2023 tour, or, extra just lately, complaints about surging ticket costs for Oasis’ 2025 UK tour.
Followers angered at seeing Oasis tickets rise in value in actual time – the results of Ticketmaster’s “dynamic pricing” mannequin, which reacts to demand – criticized the ticketing firm on-line, triggering an investigation into dynamic pricing by the UK’s Competitors and Markets Authority.
“We’re all the time a little bit amused that sports activities is form of a badge of honor – how costly these tickets [are] – however music, which is priced a lot decrease than sports activities, appears to get extra of the emotional response.”
Michael Rapino, Stay Nation
Evidently stung by the criticism, Oasis introduced they might not use dynamic pricing in gross sales for the North American leg of their tour.
Stay Nation has argued up to now that dynamic pricing is a manner of reducing into the secondary ticket market (i.e., scalpers and resellers) who revenue from excessive demand for exhibits with out really investing something into making these exhibits occur.
Rapino has beforehand argued that dynamic pricing permits artists to seize extra of the earnings from followers who’re prepared to pay reasonably than having that cash go to secondary sellers.
On the earnings name Monday, Rapino reiterated Stay Nation’s hopes for stricter regulation of the secondary ticket market, particularly as a result of “America appears to be a market the place secondary is free to run.”
Rapino stated he’d prefer to see stronger regulation cracking down on the bots utilized by resellers to purchase giant numbers of tickets out from underneath common customers, in addition to speculative promoting – the observe of secondary sellers providing tickets they themselves have but to buy.
“We hope, over time, higher rules get put in place to assist the buyer,” Rapino stated.
Rapino’s feedback got here because the firm reported stronger-than-expected income for the quarter ended September 30, coming at USD $1.66 per share, versus Wall Avenue estimates of $1.59.
Nonetheless, the corporate’s income took a success throughout the quarter, sliding 6% YoY to $7.65 billion. That was largely resulting from weak spot in stadiums this summer time, a difficulty that Stay Nation had flagged in earlier earnings calls. The corporate says it’s on observe for an additional robust stadium 12 months in 2025, which Stay Nation expects will probably be extra like 2023, the 12 months of blockbuster excursions from Taylor Swift, Bruce Springsteen, and others.
Listed here are three different issues we realized on Stay Nation’s newest earnings name:
1. Stay Nation is ‘hopeful’ about its antitrust battle underneath a Trump administration
Stay Nation is “hopeful” that the incoming Trump administration will go simpler on the corporate in its ongoing battle towards a authorities antitrust lawsuit.
The US Division of Justice sued Stay Nation this previous Might, alleging “monopolization and different illegal conduct that thwarts competitors in markets throughout the reside leisure business.” The DoJ is searching for a break-up of Stay Nation and its ticketing division, Ticketmaster. The attorneys normal of 39 US states and the District of Columbia have joined the lawsuit.
Requested by an analyst whether or not a Donald Trump presidency “goes to be an excellent factor for you,” Stay Nation President and Chief Monetary Officer Joe Berchtold stated the corporate is “hesitant” to say a lot on the problem, on condition that “it’s nonetheless very early within the transition course of.”
All the identical, the corporate is “hopeful that we’ll see a return to the extra conventional antitrust strategy the place the companies have typically tried to seek out methods to unravel issues they see with focused treatments that decrease authorities intervention within the market.”
“Focused treatments” are typically options to anti-competitive practices that fall wanting breaking apart a enterprise. One such focused treatment was put in place in 2010 as a situation for presidency approval of Stay Nation’s acquisition of Ticketmaster.
It prohibited Stay Nation from doing issues corresponding to “retaliating” towards live performance venues for utilizing different ticketing corporations, or threatening venues. That settlement was supposed to finish in 2020, however was prolonged for an additional 5 years after the DoJ concluded that Stay Nation had violated some points of the settlement.
This 12 months’s lawsuit goes a lot additional, asking a federal court docket to order Stay Nation to divest itself of Ticketmaster, a transfer that Stay Nation strongly opposed even earlier than the lawsuit was filed. The corporate has repeatedly argued that the issues customers and policymakers are annoyed with are out of the arms of Ticketmaster. Amongst different issues, the corporate has stated that costs are set by artists and sports activities groups, and never Ticketmaster.
The lawsuit “blames Stay Nation and Ticketmaster for prime service prices, however ignores that Ticketmaster retains solely a modest portion of these charges. In truth, major ticketing is without doubt one of the least costly digital distributions within the financial system,” Stay Nation stated in a response to the lawsuit.
On the corporate’s Q3 earnings name on Monday (November 11), Berchtold stated the lawsuit displays a “far more interventionist philosophy at present than you’d anticipate of a Republican administration.”
He added that Stay Nation will probably be able to “have interaction” with the brand new administration as quickly because the administration itself is prepared.
“They should get by way of the appointments and get issues settled on their finish, however we’d definitely be hopeful that we might begin participating with them early subsequent 12 months,” Berchtold stated.
2. Stay Nation predicts 20% of live performance capability will finally go to superfans
Many music corporations at present are speaking the speak in terms of higher monetization of superfans, however Stay Nation argues that it has been strolling the stroll for a very long time.
“We’ve been promoting to the tremendous fan for fairly some time,” Rapino stated, noting that at Stay Nation this phase of shoppers who’re prepared to pay for a greater expertise are known as “the premium fan.”
“That’s form of been an ongoing talent set we’ve had perpetually,” Rapino stated.
And he believes there’s far more that may be accomplished to develop superfans’ market share of reside occasions. He famous that lots of the renovations of Stay Nation-owned venues embrace a rise within the share of VIP seats. Rapino thinks he can develop the premium phase of live performance tickets to 20% of all gross sales.
“We all the time promote out of the bins, promote out of the premium stock first. We by no means have an issue promoting that,” he stated.
“That may be a massive a part of our CapEx and our [refurbishing of venues] in addition to our new buildings once we’re constructing them. We’re beginning with this mandate that they will need to have a sure larger proportion of premium seats and lounges and experiences. So these venues begin with a a lot better return.”
3. ‘Ticketmaster is a expertise firm’
One of many arguments the US Division of Justice is making in its antitrust case towards Stay Nation/Ticketmaster is that the tie-up of those two corporations means “music followers in the USA are disadvantaged of ticketing innovation and compelled to make use of outdated expertise whereas paying extra for tickets than followers in different nations.”
Stay Nation couldn’t see it extra otherwise. In truth, the corporate’s management has argued that Ticketmaster grew to become the dominant participant in ticketing by creating higher applied sciences than the competitors. Due to that expertise, Ticketmaster is ready to “promote tickets at a quantity that others have been unable to deal with,” Rapino stated on the earnings name.
He might have been referring to the current ticket gross sales for Oasis’ world tour subsequent 12 months, which Rapino described final month as “the largest on-sale in historical past” with “essentially the most demand in historical past.”
“Ticketmaster is a expertise firm. So [we’re] going to proceed to be creating merchandise on each an enterprise and a market foundation.”
Michael Rapino, Stay Nation
At a current Bloomberg convention, Rapino stated the on-sale of Oasis tickets was hit by “multi billions” of bots making an attempt to seize tickets for the secondary market.
“We now have the very best platform on this planet. It’s very arduous when you will have 10 billion bots hitting your system at [the start of sales] to steal your tickets… I’m so glad the system didn’t go down. We stopped them. We received it accomplished.”
On the earnings name Monday, Rapino stated investments into Ticketmaster’s expertise – each on the again finish and on the consumer-facing facet – will proceed.
“We spend tens of hundreds of thousands of {dollars} in capital on Ticketmaster,” he stated. “We proceed to innovate the merchandise that we provide – on the enterprise facet – to our venues, to promoters, others who use the platform… that’s included rather a lot round pricing expertise to assist all people perceive the market worth of the content material they’re delivering.
“Actually additionally it’s on the advertising facet, creating nice advertising science capabilities to assist individuals market their exhibits, massive investments over the previous couple of years on persevering with to boost our capacity to deal with that prime demand on sale.”
He added: “Ticketmaster is a expertise firm. So [we’re] going to proceed to be creating merchandise on each an enterprise and a market foundation.”Music Enterprise Worldwide
